Asian markets are posting rallies, but should you trust it?

Asian markets were higher on Tuesday, amid hopes that last week’s brutal global market rout might be in the rear view mirror.

The Hang Seng Index tacked on 2.38 percent by 11:13 A.M. SGT and the Straits Times Index was up 1.41 percent at 11:36 A.M. SGT. That followed a rebound on Wall Street overnight, with the S&P 500 up 1.39 percent and the Dow Jones Industrial Average up 1.7 percent.

But one analyst saw some reason to remain cautious.

“This classic reversal structure certainly gives investors reason for optimism,” Kathy Lien, managing director for FX strategy at BK Asset Management, said in a note late on Monday. But she noted that currency movements didn’t follow suit, with the risk-sensitive dollar/yen pair finishing the day unchanged and the euro/dollar and Aussie/dollar only seeing modest rallies.

”FX traders were initially pleased with the Budget deal to reopen the government, but they are not encouraged by President Trump’s budget proposal for 2019 that signaled a disregard for the deficit,” she said. “With 10-year Treasury yields hitting fresh four-year highs today, the equity market and the U.S. economy is still in the danger zone.”

Lien expected “waves of choppiness” to last for weeks unless yields fall meaningfully.